Kazakhstan overview

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Cityscape in Kazakhstan

In Kazakhstan we have the following priorities:

Fostering private sector competitiveness, connectivity and strengthening economic governance: the EBRD will promote digitalisation of private companies, support state digitalisation strategies and facilitate investments in smart technologies across the municipal, transport and energy sectors. It will be financing key infrastructure, including roads and railways, and help develop alternative transport routes under the EU Global Gateway initiative. The Bank will also work with the authorities to strengthen the regulatory framework for public-private partnerships (PPPs). In the financial sector the EBRD will concentrate on providing finance and capacity building for local banks, enhancing the use of the tenge overnight index average (TONIA) to promote local currency lending and scaling up its Trade Facilitation Programme.

Supporting Kazakhstan’s green pathway to carbon neutrality and climate resilience: the EBRD will continue to finance renewable energy projects and help integrate renewables into the national power network. The Bank will support the development of a decarbonised and climate-resilient energy system. Special attention will be paid to the development of carbon markets, cleaner energy generation and the reduction of air pollution. It will continue supporting the authorities’ drive to develop Paris Agreement aligned strategies. The EBRD will finance and advise companies, including small businesses, on decarbonisation and will support green municipal and transport infrastructure projects.

Promoting economic inclusion and gender equality through private sector engagement: the EBRD will promote an inclusive and diverse workforce, and support joint public and private sector reviews of skills, including digital and green skills, to better reflect labour market needs. It will work with Kazakhstan’s financial regulator to promote inclusive lending practices by financial institutions, help build their capacity aimed at inclusion and support women-led businesses. The Bank will be providing financing for businesses in the regions of Kazakhstan, improving intra-regional connectivity and supporting digital solutions. The EBRD will also be working with various stakeholders to promote corporate social responsibility activities in the regions to improve the local business environment.

The EBRD’s latest Kazakhstan strategy was adopted on 22 June 2022

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EBRD forecast for Kazakhstan’s Real GDP Growth in 2022 2.0%

EBRD forecast for Kazakhstan’s Real GDP Growth in 2023 2.5%

In 2021, Kazakhstan remained reasonably resilient to external shocks, owing to significant fiscal buffers and National Fund reserves. Real GDP grew by 4 per cent amid the easing of Covid-19 restrictions, a recovery of domestic demand, and strong export performance. The January 2022 events, while shaking the country’s political foundations, did not have a major impact on the economy. In January-February 2022, the economy was helped by strong external demand, with exports rising by 71.4 per cent year-on-year, supported by higher oil prices. However, Kazakhstan has been negatively affected by the war on Ukraine. Like other regional currencies, the Tenge suffered a speculative attack in late February but almost fully recovered in the second half of March, helped by the Rouble’s comeback and an adequate reaction by the Kazakh regulator. That said, the general mood among investors and financiers is one of severe uncertainty. Inflation soared to 12.0 per cent year-on-year in March 2022 owing to rising food and commodity prices. Facing higher costs of funding (the central bank hiked its policy rate from 10.25 per cent in January to 13.5 per cent in February and to 14 per cent in late-April 2022), commercial banks raised interest rates and cut back on long-term lending, negatively affecting consumer spending and investment. Another major concern is the possibility of secondary sanctions being imposed on Kazakh banks for dealings with Russian entities. Transportation and logistics have also become a major worry. The CPC pipeline – accounting for two-thirds of Kazakhstani oil exports – is partially blocked since March 23 due to technical issues at the Novorossiysk port. Another wave of Covid-19 in China led to additional border crossing and trade restrictions.

Most importantly, as Western companies pull out of Russia, Kazakhstan has to seek replacement suppliers and alternative supply routes. The extra costs of more complicated trade logistics (over the Caspian Sea and Georgia) will likely be passed onto Kazakh consumers and producers, adding to inflationary pressures and detracting from the country’s international competitiveness. Overall, the economy is expected to grow at a slower pace of 2.0 per cent in 2022, and 2.5 per cent in 2023, assuming commodity prices remain elevated and Kazakhstan maintains its access to export markets.


Kazakhstan in the EBRD’s 2022-23 Transition Report


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